The Fibonacci sequence is a mathematical ratio in which a number is simply the sum of the two preceding numbers. Here, we will focus on its application as an indicator in technical analysis. If you are interested in the background of the Fibonacci numbers, read the Wikipedia article.

    In trading, the term Fibonacci refers to a tool that measures the size of a price move and subsequently plots support and resistance levels based on calculations using the Fibonacci sequence.

    They are generally strong levels of support and resistance, also because they are a self-fulfilling prophecy. Banksfinancial institutions and other traders observe these support and resistance levels and make their buying and selling decisions based on them.

    Read more about employing the Fibonacci tool:

    The Fibonacci tool is popular in technical analysis. Discuss it with other traders: